Wal-Mart Reconsidered

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I don't dispute that Walmarts may have a benign effect on the small business sector as new businesses replace competing business. That certainly makes economic sense. But the fact is, businesses which did compete directly with Walmart and other big box stores (Home Depot, Costco, etc.) HAVE gone out of business. LOTS of them. While overall small business may not be hurt, the small businesses effected by the competition certainly were.
What went with them was service, an air of familiarity, even friendliness and the last vestiges of a small-town, community feeling. It's impossible to compete financially as a small business with a big box store, because they rely on volume for profits whereas a small business relies on the profits from individual sales. Volume is obtained by offering the same or similar item for less than the competition, gaining the item wholesale at a better price (Bulk buying is a great way to lower per-unit costs) and undercuts the local competition, reaping less profit per unit but selling more units. With global connections, an integrated delivery system (one of the best in the world), and bulk buying of items, they can outlast any local, small business who tries to compete with them head to head on prices.
Yes, the overall small business sector isn't detrimentally effected, and maybe even flourishes, but it's hell on the businesses it DOES drive out.
And, Bob, I apologize for my reply. It was a bit hard to follow. To answer the question, in part, yes, the Treasury loses revenue because the wages paid to workers manufacturing goods in other countries are not collected by the US. This includes Social Security. But Chris is also correct in that service oriented business have taken up a good deal of the slack. Compare Labor Department statistics between the incomes and number of people working in both the service-sector and manufacturing today with the same stats from about 1985 (or before wholesale outsourcing of manufacturing), factor in inflation and you should get a sense of what revenue was gained or lost in social security and taxes by manufacturing moving overseas.
This, of course, fails to take into account all of the support services manufacturing had such as obtaining raw materials, sub-assembly contractors, support services like catering, janitorial services, accounting, etc (assuming they didn't have their own departments for these things). This means the numbers you get will be only a hazy reflection of the actual differences, especially when you consider most of those support services probably switched to serving different businesses when manufacturing was sent overseas, or went there with them.
Overall, tax revenues have increased, but so has spending, so it's hard to say what, if any, actual net effect a loss of manufacturing has had on US tax revenues.
Again, sorry if my reply confused you. It was way past my bedtime when I wrote it.

Fatesrider of CA 5:37AM July 06, 2008

Fatesrider, that is prerogative to shop at a higher price. However, it isn't Wal-Mart that destroys small business. No, it is consumers and consumers choosing to shop at Wal-Mart that does. Wal-Mart brings convenience, good prices and a variety of goods and services into one area that makes it much easier for the average consumer to shop around. Remember, Wal-Mart's clientele is mostly working class, low to middle income Americans and in today's environment they are providing great value that you cannot find in a small business.
Also, this notion that Wal-Mart sells only cheap products is on its face baseless. Those of you who are making the argument that Wal-Mart only sells "cheap" products, try shopping in the store. They sell many name brand items such as Sony, Panasonic, Hasbro, Verizon Wireless, Dell, HP, Apple, etc. One thing that Wal-Mart has done is forced many businesses to rethink their supply chain models and work out the inefficiencies to become leaner and more adaptive to the ever-changing retail industry.
Speaking of which, there is also empirical evidence that when a Wal-Mart moves into town, other businesses such as restaurants, beauty salons, etc. (many of which are small businesses) move into the area and they benefit from the mass traffic resulting from a Wal-Mart locating into an area.
Bob, to answer your question, manufacturing has been losing many jobs for decades, well before there even was a Wal-Mart. These lost jobs have been slowly replaced by service sector jobs, many more high-paying than those manufacturing jobs that were lost. The loss of manufacturing jobs and the gain of service sector jobs probably has resulted in some negligible losses in Social Security and Medicare revenue, but there is only one way that you can increase Social Security and Medicare revenue over the long run: there need to be more people working than those taking benefits. Right now, that is beginning to invert. What Fatesrider is telling you is exactly what he decries in his parenthesis. Doing that comparison is not going to help you figure out why Social Security is running into a deficit. If you really want to educate yourself on the matter, go directly to the source, www.socialsecurity.gov and www.medicare.gov. Most people who are experts on have already come to the exact conclusion that I have just stated.

Chris of AZ 4:03PM July 04, 2008

Hi Bob. If you're not trusting of government figures (bad news is usually buried in incomprehensible bureaucrat-speak for political reasons) and want to do the research yourself, the disparity between labor revenue spent in the US for goods and services and the revenue from overseas can be deduced by comparing wage statistics, manufacturing profits and the trade deficit between the US and whatever countries you want to compare over a time frame of your choosing. Just looking at the trade deficit overall wont give you an accurate picture.
As to who may have done a study, I'd suggest checking with the US Bureau of Labor statistics and the Department of Commerce. They would be in charge of tracking the kind of data you're looking for. You'll probably have to do some math, but that should at least get you the raw data to do it.
As for Walmart, I can't think of any place on Earth that exemplifies cheap goods better. There's a quality difference between cheap and inexpensive. Walmart is cheap. As such, I'd rather go elsewhere and spend a bit more to get something better quality than the average fare from Walmart.

Fatesrider of CA 12:32AM July 04, 2008

Does our National Treasury lose revenue due to products sold in America that are made elsewhere? If you consider the SS tax, Medicare Tax, etc, that would otherwise be paid by manufacturing labor, is this really a good deal for America? We kinda need the money right now, correct? Can someone point me to a study that addresses this issue specifically? Thanks in advance.

Bob of FL 6:25PM July 03, 2008

It's true that Wal-Mart has negatively impacted small businesses over the years. But it's also true that those businesses that don't go heads up against Wal-Mart and instead offer selection that their customers want at a fair price can prosper. Bad retailers that don't understand their customers rules will die even if there isn't a Wal-Mart store within 50 miles. I live in Colorado and often drive the state on short vacations. I can tell you that I see healthy downtowns with local retailers even when there is a Super Wal-Mart a few blocks down the road. So while it's easy to make Wal-Mart the whipping boy, they don't deserve all the bad press they get. It's easier for a retailer to blame Wal-Mart then to blame their failure on themselves.

Robert Gordman of CO 5:16PM July 03, 2008

Wal-Mart destroying small town America? Preposterous. Walmart IS small town America. It is the culmination of probably the most successful "Mom n' Pop" shop in the history of the world.
The fact of the matter is this: If Mom n' Pop have been fleecing the population of their small-town, then they're going to be taken to the cleaners when Walmart moves in.
Let's say it again for clarity. If you have been overcharging the people of your town -- if you have been taking advantage of your friends and neighbors -- if you have been marking up prices beyond a reasonable level -- if you have been employing people at minimum wage and providing NO benefits whatsoever... then Walmart will win. Period.
Trying to compete with Walmart on price is most likely a losing proposition. But, if you can provide the public with goods or services NOT provided by Walmart, then you will find success and, very likely, thrive in an environment where Walmart brings people to your small town. Case in point: Bentonville, Arkansas. The headquarters of Walmart features a quaint small town. The town square has a small grocery store, a few restaurants and coffee shops, art museum, upscale clothiers, a high-end bicycle shop, a jewelry store, an art museum, and more...
This small town thrives. But what you will NOT find in downtown Bentonville is a discount retailer. They have learned to live alongside Walmart and reap the benefits of its presence.
The Norman Rockwell version of the country is long gone. It doesn't matter whether you shop at Walmart, Target, JC Pennys, K-mart, Macys.... you name it. You will find globally sourced products. So that argument does not hold water.
But small businesses being unable to compete with Walmart? Ridiculous. They just have to learn to compete SMART.

Mike of TN 3:24PM July 03, 2008

After several very poor experiences with service at Wal-mart, and realizing that dealing with their check-out lines is worth at least some additional consideration, I have been boycotting Wal-mart for several years now. Yes, I have friends (typically with large families) who still think Wal-mart is the retail mecca of America, but I'd say more often than not people that I know and talk to would rather shop elsewhere -- and there are still plenty of cost-effective options besides the retail giant. It's another case of discovering that choosing not to include something in my life has made no negative personal impact whatsoever -- in fact, I'd say it's the opposite.
On the other hand, I do know of some instances where local businesses where impacted by the intrusion of a superstore, so I can't say that I agree with a statement that says it's presence has no ill effects on small businesses.
All things considered, Wal-mart has become in many ways their own worst enemy, gaining notoriety for poor service and bottom-rung quality products. There's still plenty of other niches in the market to support healthy local businesses.

of SC 3:00PM July 03, 2008

America is long past the "debate" whether Walmart drives out smaller direct competition, especially in small towns. Of course it does, and it has for 30 years, which is a bad thing if you were running one of those small stores on the old "main" street.
But for everyone else, Walmart (especially a Supercenter with groceries) is a heck of a deal. Buy everything you can in the "Equate" or "Great Value" house brands.
Save a couple of thousand a year doing it on the stuff you have to have. But DON'T buy unnecessary stuff from China just because it's there. (Not to "spite" Walmart, but because if it's unnecessary---it's UNNECESSARY.
Or, if you don't need a couple of thousand savings a year and don't like Walmart, then don't go to Walmart. But recognize, they're here for everyone else and they are not going away.

Daniel David of NM 2:24PM July 03, 2008